2021 (7) TMI 1079 - AT - Income Tax

Penalty u/s 271(1)(c) - disallowance on account of expenditure on construction of BQS as capital expenditure - HELD THAT - If we note that identical issue had arisen before this Tribunal in Assessment Year 2007-08 and 2008-09 in assessee s own case 2020 (1) TMI 1481 - ITAT DELHI respectively and the Department s appeals against the deletion of the penalty imposed in these two years to Assessment Years were dismissed by this Tribunal. There is no case of the revenue that the assessee filed inaccurate particulars of income or concealed the income, as all the details in the original return as well as in the revised return was placed before the AO - Merely changing the stand as to how the trade income/expenditure as to be taken as capital or revenue, does not amount to furnishing of inaccurate of particulars or concealment of income. Therefore, the CIT(A) was right in deleting the penalty. There is no need to interfere with the findings of the CIT(A). The facts are identical in A.Y. 2008-09 as well. Therefore, both the appeals of the revenue are dismissed.

Summary

Issues:
Deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
The appeal was filed by the Department against the order passed by the Learned Commissioner of Income Tax (Appeals)-36, New Delhi for Assessment Year 2012-13, challenging the deletion of a penalty of ?87,94,892 imposed under section 271(1)(c) of the Income Tax Act, 1961. The assessee, engaged in 'out-of-home' advertisement, had capitalized expenditure on Bus Queue Shelters (BQS) but claimed it as revenue expenditure in the return of income. The Assessing Officer disallowed the expenditure as capital expenditure, leading to penalty imposition under section 271(1)(c). However, the penalty was deleted by the Ld. CIT(A) for Assessment Years 2007-08 and 2008-09, and the Department's appeals against these deletions were dismissed by the ITAT in 2020.

In the present case, the Tribunal noted that the facts in Assessment Years 2007-08 and 2008-09 were identical to the current year under appeal. The Ld. Sr. Departmental Representative accepted this fact, leading to the upholding of the Ld. CIT(A)'s order and the dismissal of the Department's appeal. The Tribunal emphasized that changing the treatment of trade income/expenditure from capital to revenue does not amount to furnishing inaccurate particulars or concealing income, especially when all details were disclosed to the Assessing Officer. The Tribunal found no grounds to interfere with the CIT(A)'s decision, as there was a difference of opinion regarding the nature of the expenditure on BQS.

In conclusion, the Tribunal dismissed the Department's appeal, affirming the decision to delete the penalty under section 271(1)(c) for the Assessment Year in question. The decision was announced at the Virtual Hearing on 12th July 2021.